Explaining Mastercard Reason Code 4860 — Credit Not Processed
In simple terms, Mastercard chargeback reason code 4860: Credit Not Processed refers to situations where a cardholder expected a credit to appear on their statement, but it wasn’t there.
IMPORTANT:
Mastercard has reconfigured its reason code structure in the last few years. Reason Code 4860 is considered a legacy code. While technically functional, it is being consolidated into 4853, and therefore should not be used. “Credit Not Processed” chargebacks should now be filed under Reason Code 4853.
When customers are unhappy with a transaction, but cannot resolve the situation through the merchant, the cardholder may be able to force a reversal by filing a chargeback.
To simplify this process, the situations that may qualify for a chargeback are broken down into designated “reason codes.” Each card network has its own set of codes, and banks assign the appropriate one to each case so all parties know the given reason for the chargeback.
While most of the same scenarios are covered, the designations can vary considerably. Understanding which code is which can be challenging, so we’ve created guides to help merchants know how best to fight or prevent the different chargeback types.
What is a “Credit Not Processed” Chargeback?
Mastercard chargeback reason code 4860: Credit Not Processed covers situations where the cardholder claims they are due a credit, but believes the merchant did not provide it.
There are several scenarios where a customer may reasonably expect a payment reversal. They may have returned an item, for example, or perhaps were billed for a service twice. Likewise, there could be reasons the credit did not appear on the cardholder’s monthly statement:
The merchant neglected to issue the credit, either intentionally or by accident.
The merchant issued the credit but it was not processed in time for it to show up on the latest statement.
The merchant doesn’t accept returns. In this case, the merchant was obligated to clearly explain this in the policies before the purchase; if it was not explained in the policy, responsibility for the chargeback falls on the merchant.
The cardholder filed the chargeback for an amount greater than the original transaction amount.
However, there are some instances where the merchant did issue the refund, correctly and on time. In these cases, the customer may be attempting to commit friendly fraud.
Responding to Mastercard Reason Code 4860 Chargebacks
Again, since Mastercard retired this code, it should not be used by banks. For the time being, however, chargebacks filed under 4860 are still considered valid.
Customers may attempt to get unearned credits using the 4860 code. For example they may call the merchant for the refund, then immediately call the bank to file the chargeback, hoping to receive a double refund.
If the merchant has evidence the credit was actually filed or that the customer’s claim is invalid, they can challenge the chargeback through representment. For time limits and evidence requirements, consult our detailed article on Mastercard Reason Code 4853 — Credit Not Processed.
Can Reason Code 4860 Chargebacks Be Prevented?
It’s natural to assume that chargebacks are the result of criminal activities like identity theft or account takeover. In reality, though, Reason Code 4860 chargebacks are more often the result of missteps or errors in merchant policies or practices.
This means that Credit Not Processed chargebacks are almost always preventable by implementing best practices:
Accept returns, and make the process as easy as possible.
Simplify return and refund policies and post them prominently in places they are sure to be seen. This should include links on every page of your website.
Issue refunds promptly, and make sure they are submitted for processing in a timely manner.
Send an email to alert the cardholder once the credit process is underway. Using a purchase return authorization, which allows the cardholder to see a refund is pending, is also evidence that the credit is on its way.
Chargeback Prevention: A Wider View
Most Mastercard reason code 4860 chargebacks can be avoided, but there’s no sure way to identify friendly fraud before it happens. You won’t know until after the fact if a customer is deliberately trying to steal from you.
That’s why it’s generally more efficient to take a proactive stance with all aspects of chargeback management. A truly effective strategy must encompass prevention, but it is equally important to dispute cases of friendly fraud.
Chargebacks911® can help manage all aspects of every chargeback reason code, with proprietary technologies, experience-based expertise, and the industry’s only performance-based ROI guarantee. Contact us today for a free analysis to learn how much more you could save.
